Benchmarks witness bloodbath on Monday; Sensex breaches 33,800 mark

Monday turned-out to be a disappointing day of trade for Indian equity benchmarks, where frontline gauges lost around a percentage point to end below their crucial 33,800 (Sensex) and 10,400 (Nifty) levels. After making a pessimistic start, domestic gauges traded in red terrain throughout the day, as traders remained concerned with US President Donald Trump’s statement that he would impose tariffs on imports of steel and aluminium products, in a move he said would protect US industry. Sentiments remained dampened with report that activity in India’s service industries contracted in February for the first time since November as rising price pressures led to a decline in new businesses orders. The seasonally adjusted Nikkei India Services Business Activity Index fell from 51.7 in January to 47.8 in February, its lowest level since August.

Adding to the pessimism, foreign investors have pulled out more than Rs 11,000 crore from Indian stocks in February 2018 amid better opportunities in other emerging markets. This is the largest outflow in five months. However, the total inflow by foreign portfolio investors (FPIs) in the Indian equity markets stood at Rs 13,781 crore in January 2018. Traders failed to get any sense of relief with Finance Minister Arun Jaitley’s statement that India would retain its position of fastest growing economy in the coming decades, like China did in the last three decades. He said, the way the situation in the world is changing there is a great opportunity that has come in the way of India. Market participants also overlooked report that the BJP expanded its foothold in northeast with its stunning victory in Tripura polls and improved performance in Meghalaya and Nagaland elections, boosting its prospects for 2019 Lok Sabha polls.

On the global front, European markets were trading in green in early deals, as traders took encouragement with report that British businesses grew at the fastest rate in more than two years in the three months to February, despite uncertainty about Britain’s prospects as it prepares to leave the European Union. Asian markets ended mostly in red as sentiments got hurt on report that that growth in China’s services sector softened slightly in February but remained robust, prompting companies to hire more workers for the 18th month in a row.

Back home, metal stocks lost their sheen as US President Donald Trump’s proposed policy on steel, of which his country is the planet’s biggest importer, may cause a supply glut in India, with shipments originally bound for Washington likely to end up at seaports of the world’s fastest-expanding major economy if they can’t hurdle across the American tariff walls. Realty stocks remained under pressure on report that as many as 4.4 lakh housing units were unsold in seven major cities at the end of 2017 with Delhi-NCR contributing maximum at over 1.5 lakh flats. Out of the total unsold housing stock, 34,700 units are ready-to-move-in flats. Mumbai, Delhi-NCR, Chennai, Hyderabad, Pune, Bengaluru, Kolkata are seven cities covered in this survey.

Finally, the BSE Sensex tumbled 300.16 points or 0.88% to 33,746.78, while the CNX Nifty was down by 99.50 points or 0.95% to 10358.85.

The BSE Sensex touched a high and a low of 34,034.28 and 33,653.41, respectively and there were 6 stocks on gaining side as against 25 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.95%, while Small cap index was down by 1.09%.

The few gaining sectoral indices on the BSE were IT up by 0.37%, Consumer Durables up by 0.26% and TECK was up by 0.08%, while Metal down by 3.30%, Energy down by 2.16%, Basic Materials down by 2.14%, Oil & Gas down by 1.81% and Industrials was down by 1.64% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.50%, TCS up by 2.21%, Mahindra & Mahindra up by 0.81%, SBI up by 0.48% and Kotak Mahindra Bank up by 0.25%. On the flip side, Tata Motors down by 5.04%, Tata Motors - DVR down by 3.92%, Tata Steel down by 2.95%, Bajaj Auto down by 2.73% and Reliance Industries down by 2.48% were the top losers.

Meanwhile, India’s state-owned banks have written off Rs 516 crore worth of bad loans owed by wilful defaulters in the first half of fiscal year 2017-18 (H1 FY18). As per the finance ministry data, 38 loan accounts of wilful defaulters were written off the books of banks during April-September period of FY18. Write-off in banking parlance means that the bank has made 100% provision from its earning against that account. Following this, non-performing asset (NPA) is no longer part of its balance sheet. However, the write-off puts pressure on bank's balance sheet as it erodes operating profit.

According to the data, the country’s largest bank by asset, State Bank of India (SBI) accounts for 27% of the total outstanding loans run up by wilful defaulters as on March 31, 2017. Data further showed that of the total number of the wilful defaulters, as many as 1,762 wilful defaulters owed Rs 25,104 crore to SBI as on March 31, 2017, putting stress on the bank's balance sheet. It also highlighted that Punjab National Bank (PNB) is number two on the list with 1,120 wilful defaulters with outstanding loans to the tune of Rs 12,278 crore. The two banks account for Rs 37,382 crore or 40% of the total bad loans. It added that total outstanding loans due to public sector banks (PSBs) by 8,915 wilful defaulters amounted to Rs 92,376 crore.

The Reserve Bank of India in its direction to banks in 2015 had said that lenders should initiate legal proceedings wherever warranted, against the borrowers or guarantors and foreclosure for recovery of dues should be initiated expeditiously. The lenders may initiate criminal proceedings against wilful defaulters, wherever necessary.

The CNX Nifty traded in a range of 10,428.70 and 10,323.90. There were 8 stocks in green as against 42 stocks in red on the index.

The top gainers on Nifty were Tech Mahindra up by 3.60%, Sun Pharma up by 2.23%, TCS up by 2.15%, NTPC up by 1.29% and UPL up by 0.98%. On the flip side, Tata Motors down by 5.07%, Hindalco down by 4.98%, Aurobindo Pharma down by 3.91%, Tata Steel down by 2.87% and Reliance down by 2.72% were the top losers.

European markets were trading in green; France’s CAC gained 14.13 points or 0.28% to 5,150.71, UK’s FTSE 100 increased 21.54 points or 0.3% to 7,091.44 and Germany’s DAX was up by 84.47 points or 0.71% to 11,998.18.

Asian markets closed mostly lower on Monday as fears of a global trade war persisted and the prospect of a hung Parliament in Italy looked increasingly likely. Japanese shares hit a near five-month low as the safe-haven yen strengthened amid fears that a global trade war could break out hurt steelmakers, automakers and shipping companies. Chinese shares ended largely unchanged as Chinese leaders headed into an annual parliament meeting and a survey showed activity in China's services sector cooled slightly last month. The Caixin services PMI dropped to 54.2 from 54.7 in January. Meanwhile, China maintained its growth target for 2018, despite the economy surpassing the goal last year, as the government aims to contain corporate debt and rein in pollution. Premier Li Keqiang set the growth target at 'around 6.5 percent' for 2018. This was unchanged from the last year's target.